Working Holiday Visa 417 Changes Explained

Right, so the Australian Government has overhauled the working holiday Visa 417 program and has now changed the rules for both Employers/Farmers and Workers … so in today’s Blog we are going to decipher what the Government changed and what the impact of this will be.

WWOOFing / Volunteer work: You can no longer have Working Holiday Visa 417 Holders working for free in return for signing off their 88 days rural work requirements … the impact of this is far reaching:

Farmers: This cuts out a lot of small Mum and Dad farmers who have no commercial capability of employing a worker but were happy to have someone volunteer to give a hand around the farm and in return receive sign off for their Visa 417 88 day rural work requirement. Small Farmers have said there is no incentive to train someone up for just 88 days and therefore it made no sense to pay someone to come in for just 88 days. However, when it was volunteer labour it made it a more logical argument. Furthermore, Farmers have reported that in reality a chunk of Working Holiday Visa 417 Workers were doing housework, cleaning, au pair work or nannying jobs rather than the ‘specific work’ listed by the government as the ‘primary’ work Working Holiday Visa workers are required to do. This is the type of work to get cut as it’s not commercially viable for small farms to pay actual wages for an au pair/domestic house worker and they likely don’t have the money or work load to pay a farm hand so won’t transition this across to farm work.

Workers: Backpackers have now said finding rural work is difficult and harder and it has specifically impacted female Working Holiday Workers … why? Previously a portion of female Visa 417 workers have said they would prefer to do nanny/housework for free rather than stand out in the 40 degree heat and pick fruit in the boiling sun for $14 per hour … and it works both ways, with Farmers more likely to pick male labour over females if they are paying wages for someone to be doing physically taxing farm work.

For further info on the removal of WWOOFing / Volunteer work click here.

Tax free threshold for Working Holiday Visa Holders: Anyone on a working holiday visa will now have to pay tax on their first dollar earned from 1 July 2016, rather than their first $18,200 of earnings being tax-free.

Workers: Previously, Working Holiday Workers could claim the $18,200 tax free threshold like any Australian resident as a Working Holiday maker can be treated as a resident for tax purposes if they are in the country for more than six months. This compensated for the low wages they were receiving, remote locations and blistering weather conditions they were working in. Workers on a Working Holiday Visa in Australia will now be taxed like any other foreign resident, therefore scrapping the first two thresholds and being taxed at 32.5 cents in the dollar. Essentially any working holidaymakers – largely young backpackers – earning say$40,000 in Australia will have to pay a total of $13,000 instead of the current $4547. Every worker, backpacker or otherwise, currently pays $109 tax on their average 38-hour, weekly earnings. From July 1 next year, that will increase to $256.

Farmers: Farmers will have their labour pool further reduced as essentially their workers are now taking a 30% pay cut on what was already minimum wage, making them the lowest paid workers in Australia. This is a hard sell as a ‘cultural exchange’ and a lot of legitimate backpackers will pull out of their Australian ‘experience’ as it will just not be financially viable. With farm input costs growth outstripping farm revenue growth for decades, farmers are hardly likely to be able to roll out a 30% increase to wages to compensate for this shortfall.

When will this kick in: The Government has announced changes to the taxation of temporary working holiday makers in Australia from 1 July 2016.

Well that’s this weeks Blog … not a feel good story at all with some of these changes trying to protect workers and others making it harder for them and rural communities …